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Category: Iowa

Iowa Early Childhood Development Tax Credit

Early Childhood Development Tax Credit allows a credit equal to 25% of the first $1,000 of qualifying expenses paid in 2013 for each dependent from the ages of three (3) through five (5).

Expenses that qualify include the following:

  • Services provided by a preschool, as defined in Code section 237A.1
  • Books that improve child development, such as textbooks, music and art books, teacher’s editions and reading books
  • Instructional material required to be used in a lesson activity, such as paper, notebooks, pencils and art supplies
  • Lesson plans and curricula
  • Child development and educational activities outside the home, such as drama, art, music and museum activities and the entrance fees for such activities.

Early childhood development expenses that do not qualify include:

  • Food, lodging, or membership fees relating to child development and educational activities outside the home
  • Services, materials, or activities for the teaching of religious tenets, doctrines, or worship, if the purpose of these expenses is to instill those tenets, doctrines or worship.

Note: For Married Separate filers, in computing the credit, the combined net income of both spouses must be used. The credit must be divided between husband and wife in the ratio of each spouse’s net income to their combined net income.

Only taxpayers with a net income of less than $45,000 are eligible to take the Early Childhood Development Tax Credit. If you are married, your net income and the net income of your spouse must be combined to determine if you qualify, even if your spouse does not file an Iowa return.